South Korean crypto exchanges slam government’s proposed ownership cap

South Korea’s Digital Asset Exchange Alliance (DAXA) has issued a statement expressing strong opposition to the government’s consideration of capping major shareholder stakes in digital asset exchanges.

In a statement shared with The Block on Tuesday, DAXA warned that the proposed restriction could “significantly impede” the growth of the country’s digital asset industry and market. Any attempt to artificially alter the ownership structures of private companies would undermine the foundation of the emerging industry, the statement said.

DAXA is the self-regulatory organization representing South Korea’s five major cryptocurrency exchanges — Upbit, Bithumb, Korbit, Coinone, and Gopax.

Earlier this month, South Korea’s Financial Services Commission reportedly proposed capping major shareholder stakes in crypto exchanges at 15% to 20% to address potential governance risks from concentrated ownership. The proposal sparked controversy, as it could be applied to existing companies with established ownership structures.

“Unlike securities, digital assets circulate across borders without restriction,” DAXA said. “If investment in domestic exchanges is not sustained, it could lead to a loss of global competitiveness, prompting users to migrate to overseas platforms.”

DAXA further contended that major shareholders bear ultimate responsibility for user assets, beyond mere financial investment. Hence, artificially dispersing ownership would dilute this final accountability for the custody and management of user assets, ultimately harming user protection, the industry group said.

In a broader sense, placing the limits creates uncertainty that stifles entrepreneurship and investment in startups and emerging industries, DAXA warned.

The FSC’s proposal is among several measures under consideration for inclusion in the upcoming Digital Asset Basic Act — South Korea’s second comprehensive regulatory framework for digital assets.

The legislation is expected to be finalized within the first quarter of this year, and is set to formalize rules for major crypto initiatives that launched in 2025, including Korean won-pegged stablecoins and the country’s first set of spot crypto ETFs.

The proposed ownership cap follows two major ownership shakeups in the South Korean crypto sector. Upbit, the country’s largest cryptocurrency exchange, confirmed last November that it will merge with Naver Financial, the fintech subsidiary of South Korean IT giant Naver. Mirae Asset Group, a local financial services conglomerate, is reportedly in talks to acquire Korbit, the fourth-largest domestic exchange by volume.

“The only way to safeguard national interest is to design systems that align with global standards,” DAXA wrote. “At a time when we should be prioritizing the development of the digital asset industry, regulations that could destabilize property rights and the principles of a market economy must be reconsidered.”